Wednesday, June 21, 2006

Calls of Note Part 4

- Stifel Nicolaus & Company is positive on Jupitermedia Corp (NASDAQ:JUPM) following meeting with management. Management is confident they can take market share from GYI & Corbis, which seems reasonable: CEO Alan Meckler noted that JUPM has already been gaining share in the lower-end but faster growing royalty-free market. Next, Meckler has his sights set on the higher-end rights managed business and believes JUPM can take 5-10% market share from GYI & privately-held Corbis.

Firm believes JUPM's strategy of aggregating content makes sense. They believe that JUPM is building an asset that will be quite valuable to larger media and Internet companies, and that JUPM's CEO Alan Meckler will be a willing seller at the right time. At $13.33, JUPM is valued at only 10.6x 2006E EBITDA and 8.6x 2007E EBITDA - essentially valued like a slow growth old media company. Thinks the biggest long-term risk is that a price war emerges between GYI, JUPM, Corbis (private) in which all parties lose.

Believes the biggest short-term risk is that JUPM could see another quarter of higher than expected expense growth as it integrates new salespeople and IT systems across the multitude of recently acquired properties. Reits Buy and $21 tgt.